Author Question: The net loss to society from a tax on a product can be measured as: a. the loss in consumer ... (Read 72 times)

jilianpiloj · **on:** Jun 30, 2018

The net loss to society from a tax on a product can be measured as:
a. the loss in consumer surplus.
b. the loss in producer surplus.
c. the loss in both consumer and producer surplus.
d. the difference between the loss in consumer and producer surplus and the gain in tax revenue.

Question 2

During the sixteenth century, Spanish conquistadors like Hernando Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities, and taking their gold and silver. The gold and silver was sent back to Spain, causing its money supply to increase tenfold. Assuming V remained stable and Q increased slightly, what do you think happened to prices in Spain during this period?

CAPTAINAMERICA · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

d

Answer to Question 2

According to the equation of exchange, if M greatly increases while V and Q don't change very much, the price level (P) will rise. That's what happened. Spain experienced rapid inflation. In fact, prices rose all over Europe, especially near trading centers, as the new money was sent.